Saturday, April 21, 2012

AIMS Industrial REIT: 4QFY2012 results

A dividend of 2.7c per unit is declared for the period 1st January 2012 to 31 March 2012. Total DPU for FY2012 is 10.45c, which is 5.3% higher than FY2011. Based on the last closing price of $1.18, this is a yield of 8.85%

Important dates:
Ex Date: 2 May 2012
Books closure: 4 May 2012
DRP Notice of Election forms: 25 May 2012
Distribution payable date: 19 Jun 2012

Distribution reinvestment plan

A distribution reinvestment plan (DRP) is implemented for 4Q2102. Investors will have the options to reinvest the distributions into units. The pros of this is you will be able to reinvest your distributions into more units without incurring additional brokerage costs. However, you are likely to end up with odd lot units which makes if more inconvenient when you want to sell all your holdings later on.

As seen from the important dates above, investors will need to revert by 25 May on whether they want to receive the distributions in cash or in units.

Personally, I would leave my options open for now. There is still about a month or so for me to decide on whether i want to participate in this DRP. Even though the current prices are still below NAV, aims is hitting its all time high. For now, I am a little reluctant to top up at such high prices. I will decide on this again when the dates draw closer.

AIMS rising over the past few months:
Since the start of the year, we have seen AIMS rising steadily from around 90c to $1.18 as of last Friday. Even then, AIMS is still one of the best in terms of yield when compared to other REITS. 

NAV:  $1.406. 
Gearing: 30%

For now, I will not be keen to top up on AIMS; but will continue to hold my AIMS units for yield. I will also decide later if I would want to take part in the DRP or receive cash for the distributions instead.

Thursday, April 19, 2012

Genting 5.125% 1st trading day

Today is the first trading day for Genting 5.125%. Some quick number for today's trading for this counter:

Open: 1.002
High: 1.013
Low: 1.001
Volume: 14,473 lots
Closed: 1.012

The next coupon payout date is in 6 months time. As the date draws nearer, we would see it rise slowly. But the the next 1-2 months, I think it is likely that this will stay close to par value of $1.

Other thoughts:
The rich gets richer. In my last post, we saw that 22 people who applied more than 1000 lots getting 500 lots each. 2 people who applied more than 1800 lots got 889 lots each.

These people's assets just increased by $6000 or $10668 each. If the 1st group were to keep their 500 lots, they will be getting $25625 per year from this alone. How many people can even save that amount in a year?

Related posts:
Genting 5.125% bond
Genting 5.125% bond [part 2] 
Genting 5.125% Balloting Results

Tuesday, April 17, 2012

Genting 5.125% Balloting Results

Genting 5.125% perpetual subordinated capital securities balloting results are out. 

The balloting ratio are as follow:

Some summary on the results above:
1) Anyone who applied will get something
2)  If you applied for 10 lots or less, you would have been allocated 100% of hat you applied
3) The offer was about 46.8% over subscribed. This is a little lower than what I expected.

Other quick facts (extracted from SGX annoucement):
Source: SGX annoucement:$file/GENS-Announcement.pdf?openelement

1) As at the close of the Public Offer at 12.00 p.m. on 16 April 2012, valid applications in respect of S$731,339,000 in aggregate principal amount of the Securities at the issue price of 100 per cent. under the Public Offer were received.
As at the close of the Reserve Offer at 5.00 p.m. on 11 April 2012, valid applications in respect of S$3,014,000 in aggregate principal amount of the Securities at the issue price of 100 per cent. under the Reserve Offer were received. The Company did not offer any of the Securities to institutional and other investors under the Placement.

2) A final issue size of $500M was allocated as follows:
(a) S$496,986,000 in aggregate principal amount of the Securities at the issue price of 100 per cent. to the Public Offer; and
(b) S$3,014,000 in aggregate principal amount of the Securities at the issue price of 100 per cent. to the Reserve Offer.

3) Securities will be issued on 18th Apr 2012 and commence trading on 19th Apr 2012

My thoughts:
The offer was about 46.8% over subscribed. This is a little lower than what I expected. The first trading day should see some active trading in this counter. There will be some investors who got more than what they wanted and may sell some or all of their holdings on the first day. There will also be investors who are waiting to buy this counter for a better yield should it drop below par value. On the whole, I think it should stay close to the par value.

Again, we see a couple of multi millionaires applying this counter at large quantities. There are a total of 24 people who applied for more than a million dollars worthed of this offer. I wonder if they will hold it for medium to long term or will they sell on the first trading day.

The next payout will be in half a years time on 18 Oct. This will stay within my portfolio under my fixed income sector for the next few years at least. Until then, I will be keeping a lookout for opportunities to increase my passive income.

Related Posts:
Genting 5.125% bond
Genting 5.125% bond [part 2]

Saturday, April 14, 2012

Genting 5.125% bond [part 2]

There has been quite an number of discussions on the Genting 5.125% bond. Quite a number of people pointed out that the bond do not have a fixed end date and were uncomfortable investing in this counter as it will be quite volatile as interest rates changes. As interest rates are at all time low levels, there are fears of this bond dropping below par value if interest rates were to rise suddenly. With an increase in interest rates, investor will find it safer to leave their money in banks as compared to a bond.

So, what are the chances of increase in interest rates? if so, what levels could it possibly increase to?

My analysis:
Even if interest rates were to rise, my guess will be that a 12-month fixed deposit interest will not increase to a value of more than 2.5%. The rationale is simple: CPF

CPF OA interest rates are pegged to 12-month fixed deposits (subjected to a minimum of 2.5%) and
CPF-SA and MA are pegged to 10-year Singapore Government Securities + 1 % (subjected to a minimum of 4%)

Extracted from CPF website:
Interest Rate for Ordinary Account Monies
For Ordinary Account (OA), CPF members receive a market-related interest rate based on the 12-month fixed deposit and month-end savings rates of the major local banks.

The computed CPF interest rate, derived from the major local banks’ interest rates for the three-month period, 1st November 2011 to 31st January 2012, worked out to be 0.16% per annum. However, members will receive the higher rate of 2.50% as legislated by the CPF Act.

Interest Rate for Special and Medisave Account Monies
Savings in the Special and Medisave Account (SMA) currently earn either 4% or the 12-month average yield of 10-year Singapore Government Securities (10YSGS) plus 1%, whichever is the higher. The interest rate on SMA savings is adjusted quarterly, based on interest rates on 10YSGS over a preceding 12-month period.

The 12-month average yield of the 10YSGS plus 1%, from 1st March 2011 to 29th February 2012, works out to be 2.93%. Accordingly, the SMA interest rate payable to CPF members from 1st April 2012 to 30th June 2012 will be maintained at the current floor of 4%.

If interest rates of a 12 month fixed deposit hit say 3%, that will mean that CPF board has to pay out interest rates of 3%!  Do you think the government will allow interest rates to increase so significantly?

Not only that, as interest rates drop, consumer spending increase, simulating economic growth. Likewise, if interest rates increases, consumer spending decreases, companies cut their borrowings. Economy growth will slow down or even contract. As Singapore is likely to continue to concentrate on economic growth, I highly doubt that interest rates will increase significantly over the next 5-10 years. 

That being said, I will definitely apply for the Genting 5.125% bond. No doubt we can get a higher yield through other instruments like REITS, but they belong to different asset classes. A yield of 5.125% is attractive compared to other fixed income instruments.

Related Posts:
Genting 5.125% bond [part 1]

SPH: net profit of $84.1 million

SPH has reported a net profit of $84.1 million for the second quarter ending Feb 29.

Presentation slides:$file/2QFY12presentationv2.1_final.pdf?

Some highlights include:
Newspaper and Magazine
•Print advertisement revenue dipped by S$1.2m (0.3%)
•Circulation revenue declined by S$1.4m (1.4%)

•Clementi Mall recorded rental income of S$18.2m
•Revenue from Paragon increased by $1.6m (2.2%)

•Increase attributed to the Internet and exhibitions businesses

An interim dividend of 7c is also declared. This is the same amount as the previous year for the same period.

My Thoughts:
SPH has been expanding its business to the property sector in the past few years. We have seen increase in rental income from the completion of Clementi mall. Earlier this year, SPH won the tender for the Sengkang commercial site with United Engineer Limited (UEL) with SPH holding a 70% stake. Development is expected to take about 4 years to complete. Once is it completed, SPH revenue is expected to increase further. 

In the mean while, with SPH monopolistic business in local publication and attractive dividend yield, I am likely to top up on my stake on this company on market weaknesses.

Thursday, April 12, 2012

Genting 5.125% bond

Genting is issuing a 5.125% perpetual bond. This means that there is no fixed final redemption date. However, Genting may choose to redeem this bond 10 years later (year 2022).$file/GENS_announcement.pdf?openelement

Offer information statement:$File/2.2.1%20-%20OIS.pdf

Details of the bond are as follow:

For the first 10 years, the yield is 5.125% per year.
If it is not redeemed by Genting after 10 years, the yield will increase to 6.125% per year.

Min. amount
Minimum amount to apply is 5k. Subsequent increments are in 1k.
Cash only. No CPF.

Semi-annual: 18 Apr, 18 Oct

Time table:
I have highlighted the more important dates in red below.

Lodgment of Offer Information Statement
: 9 April 2012

Opening date and time for applications for the Securities
under the Public Offer
: 10 April 2012 at 9.00 a.m.

Opening date and time for applications for the Securities
under the Reserve Offer
: 9 April 2012 at 2.00 p.m.

Last date and time for applications for the Securities
under the Public Offer
: 16 April 2012 at 12.00 noon

Last date and time for applications for the Securities
under the Reserve Offer
: 11 April 2012 at 5.00 p.m.

Balloting of applications under the Public Offer, if
necessary (in the event of an oversubscription of the
Securities under the Public Offer). Commence returning
or refunding application moneys to unsuccessful or
partially successful applicants
: 17 April 2012

Expected Issue Date of the Securities : 18 April 2012
Expected date of commencement of trading of the
Securities on the Main Board of the SGX-ST
: 19 April 2012

My thoughts
Earlier, I posted about the CMA 3.8% bond:
Other CMA bond posts:

This bond has a yield of 5.125% which is more attractive than the CMA bond that IPOed earlier in this year. This yield is even higher than the 4.7% yield offered by the DBS preference shares.

The "perpetual bond" has little drawbacks for me. If I own this bond and I need to sell it for cash, I could sell it in the open market. Even though the volume for the bond is likely to be low, any losses incurred will be minimal. Of course, there are risks involved. If Genting is unable to payout the coupons, prices of this bond will drop badly.

I am likely to apply for this bond. Depending on the amount allocated, I might even cash out my CMA bond and use this as a replacement. If you are keen on applying this bond as well, do take note of the dates above.

Good luck to those applying for this.

Saturday, April 7, 2012

Pay increment Vs Inflation Rate

The financial year for some companies have ended and it is time for employees to be judged for the work performance which will affect their bonuses and pay increment. A friend brought up an interesting topic on pay increment vs inflation rate. He was also unsure how to inflation rate numbers came about. I thought that this was an interesting topic to talk about.

Inflation Rate:
The inflation rate in Singapore in 2011 was a 5.2%. In the recent quarter, it was reported that the inflation rate has dropped to 4.6% in February.

This is still considered high as compared to the past years (see below for inflation rate figures).

Time Series on CPI (2009=100) and Inflation Rate

Consumer Price Index (2009=100)
Annual Inflation rate
Source: Singapore Department of Statistics

Last updated: 25 Jan 2012
Extracted from

The consumer price index (CPI) is used to determine the inflation rate. The CPI is a basket of goods that will include food, transport, housing, clothing etc. Basically they are things that an individual will typically spend on. The various items have a certain weight allocated to it. The total amount is then benchmark to the CPI in 2009 which is given a value of 100.

In 2010, the CPI was 102.8, indicating that the inflation rate is 2.8%
In 2011, the CPI was 108.2, indicating that the inflation rate is 5.2% [108.2/102.8]

So what does this basket of goods consists of? What's the weights on each item like?
The breakdown of the different items are shown below. Housing takes up a largest weight of 25%. Right behind housing is food which takes up 22%.

You may then ask: What about the detailed breakdown of each category? 
For the food category, some people eat at hawker centres, some will eat in restaurants, some will cook themselves. How are each category computed?

A detailed breakdown is available on the same link listed above. I have extracted it here for easy reading:

To make things even simpler, let's assume we only use chicken rice as an indicator for inflation. If a plate of chicken rice cost $3.50 in 2010 and $3.70 in 2011, the inflation rate in 2011 will be 3.7/3.5 = 5.7%. In reality, some items would have increased to a lesser extent, and some items will have increased much more. The weighted average on the different category will help to give a more accurate indication to the actual "cost of living"

From the figures above, we can see that the category that has increased the most significantly is housing, followed by transport. Which is probably why we hear more and more Singaporeans ranting about the high housing costs and the ever increasing transport costs in Singapore.

My thoughts
Going back to the original topic of pay increment Vs inflation rate, if your pay had increased by 3% , you will find yourself saving lesser than what you could in the previous year even though your spending habits have not changed. Things in general now cost 5.2% more in 2011 as compared to 2010. Essentially, your spending power have declined. This means that your REAL WAGES have not increased; in fact, it has dropped.

Of course, I am not asking you to quit your job just because your pay increment is lesser than inflation. Inflation rates go up and down just like your wages. However, if your pay increment is lesser than the inflation rate, you need to be mindful about it and control your spending a little more. Otherwise, you will end up saving a lot lesser. Or even worse, you may end up spending more than what you actually earn.